Financial company Square, which owns one of the most popular Bitcoin buying apps in the U.S. called CashApp, is set to expand its presence in the cryptocurrency market. Earlier, its CEO Jack Dorsey, known for his dedication to the digital asset industry, revealed more details about a new initiative called TBD. It will eventually end up creating some semblance of a decentralized exchange. We tell you more about what’s going on.

As a reminder, decentralized exchanges are quite different from what happens on conventional centralized platforms like Binance, Kucoin and the like. The main difference is that users do not deposit their funds into the platform, but interact with the trading platform directly from their address. Consequently, the risks of hacking an exchange – as well as blocking an individual wallet – are negligible.

Decentralized exchanges are in serious demand. For example, in August 2021, their trading volume was equal to 71.2 billion dollars. The record indicator was recorded in May at the level of 162 billion.

What will happen to Bitcoin

Recall that most of the most famous decentralized exchanges (DEX) are based on Etherium, Binance Smart Chain, Solana, Avalanche and other popular blockchains. They are Uniswap, Sushiswap, PancakeSwap and other similar projects. However, TBD is preparing to introduce something new to cryptocurrency lovers – DEX, focused exclusively on Bitcoin. Here’s what Dorsey wrote on his Twitter about it.

We have decided on the direction of TBD development: it will be an open platform with a decentralized exchange for Bitcoin.

That is, Jack made it clear even in his statement that he does not intend to get involved with other cryptocurrencies. And this corresponds to his reputation. Recall, Dorsey is an open Bitcoin-maximalist, that is, a person who considers BTC to be the main digital asset. Most importantly, such people see no sense in the existence of other cryptocurrencies and call them the offensive word “shytcoin.

Dorsey seeks to address one of the major shortcomings of DEX – the lack of convenient ways to directly exchange national currencies for cryptocurrencies. To trade on most DEX, you need Etherium or other altcoins, but users still have to resort to centralized exchanges and exchangers to withdraw profits from transactions. With the advent of TBD, this need will disappear, write Decrypt.

In addition to the announcement itself, the Square executive also shared an explanation of how TBD works from the head of project development Mike Brock. Here’s his quote.

We believe Bitcoin will become the main currency of the Internet. And while there are many projects right now that seek to make the internet decentralized, we are focused entirely on creating a global monetary system for everyone. But this initiative still requires us to solve some problems.

Brock noted that the ultimate goal of TBD would be to develop a mechanism that would allow anyone to quickly transfer regular currency to any cryptocurrency wallet. All this without the help of any centralized service and in the most understandable form. Note that there are quite a few ways to buy crypto for currency now, which we’ve covered before. But TBD initiative will create one more bridge between traditional finance and crypto market, which will only help to increase inflow of new investors.

True, the demand for TBD services may not be that great. At least, that is the conclusion that can be drawn from a recent quote from Daniel Strachman, managing partner of A&C Advisors LLC, a financial services firm.

We are in the top half of the second inning of cryptocurrencies and right now it looks like Bitcoin will stay on top forever. However, even the Red Sox baseball team was defeated this year, so nothing is a hundred percent certain. It all depends on market reaction and investor appetite. There is a lot of talk about Etherium’s superiority over Bitcoin, but in reality it will take more time for the situation to become clearer.

In other words, the fact of Bitcoin’s dominance in the market is still debatable. In the future, BTC may be displaced from its position by a more promising project – Etherium or another currently popular coin. Nevertheless, Bitcoin still has a huge reputation, faith and history of cryptocommunity development, so its ecosystem is unlikely to be hit hard.

It is important to note that it was decentralized exchanges that were once responsible for loading up the Etherium network and the incredible growth of commissions. And since Bitcoin’s network can only handle 7 transactions per second (instead of 15 in Etherium), we predict a similar situation in the case of a popular trading platform launch.

Most likely, the case will end with an unprecedented increase in commissions above the historical maximum. Right now it is at $62, recorded on April 21, 2021. Naturally, under such conditions it will be easier for users to resort to the services of conventional centralized exchanges.

What is especially funny is that fans of Etherium can already use Bitcoin in trading on decentralized exchanges. However, here we will be talking about the equivalent of BTC in the Eth network called Wrapped Bitcoin or WBTC. Its value is equal to the corresponding Bitcoin in its blockchain.

We believe that Jack Dorsey is hostage to his own views and reputation. Obviously, it makes little sense to have a separate decentralized exchange for Bitcoin, given its low bandwidth, because such an initiative could lead to serious network congestion and higher commissions. In addition, similar platforms have been working successfully in the Etherium network for a long time, and it is essentially possible to trade bitcoins there. Perhaps Jack should have focused on creating something more innovative. But because of his maximalism about cryptocurrencies, it is unlikely to happen.